Skip to main content

China Proposes Global Rules for Managing Sovereign Digital Currencies

Posted byReading Time:3 minutes

China’s Central Bank has proposed the application of global standards for the coming influx of sovereign digital currencies at the 2021 Bank for International Settlements (BIS) Innovation Summit held at the end of March.

The outlined plan, titled ‘Global Sovereign Digital Currency Governance’ encompasses cross-border digital transactions, risk supervision, use and ownership of data, and other related financial and risk issues.

Mu Changchun, a director of the Digital Currency Research Institute of the People’s Bank of China (PBOC), has stated that the bank aims to become the first major global central bank to issue a sovereign digital currency. It aims to propel the internationalization of the RMB and reduce dependence on the global Dollar system.

The development of sovereign digital currencies will upgrade national financial systems, act as a counterweight to the use of cryptocurrencies such as Bitcoin and improve global financial transaction efficiency.

The proposed rules would regulate global use, supervision, and information sharing. According to the PBOC, an upcoming challenge is to provide a reasonable supply of digital currency and to use it as part of a sustainable and stable development of the international monetary system.

The PBOC Proposals: 

  • The flow of financial data and digital currencies should be concurrent to help regulators monitor the compliance of transactions.
  • The digital currency should be operated through a scalable and supervised sovereign digital currency exchange platform supported by DLT (a blockchain-like distributed ledger technology) or comparable technologies.
  • Interoperability among Central Banks’ sovereign digital currency systems is crucial.
  • The independence of central banks’ monetary decisions is also crucial. One central bank’s decision on monetary supplies within its border should not interfere with another central bank’s monetary decisions.
  • At the same time, global central banks that adopt digital currencies should shoulder the collective responsibility to maintain global financial stability.

China’s Views On Central Bank Sovereign Digital Currency Development

If international standards for sovereign digital currencies are accepted on a worldwide basis, this system may gradually replace the global monetary order underpinned by the US dollar. Therefore, countries that adhere to the digital currency infrastructure will be able to decrease their reliance on the dollar. This is because several countries have lost trust in the United States use of the US dollar as a trade weapon and have used it to punish countries that do not follow US international policy.

China, RussiaIranJapan, and the UK among others have begun active work on launching their central bank digital currencies. China has already carried out pilot testing in the Beijing-Tianjin-Hebei metropolitan area, the Yangtze River Delta area, and the Greater Bay Area. The selection of these areas is motivated by their financial innovative capacity and the impact of high consumption on local economies.

Additionally, the People’s Bank of China Digital Currency Research Institute has also explored the internationalization of the digital RMB. A multilateral central bank digital currency bridge research project (m-CBDC Bridge) is being developed together with the Hong Kong Monetary Authority, the Bank of Thailand, and the Central Bank of the United Arab Emirates.

It is significant that China has taken the lead on acknowledging the developing digital trend and its growing impact on global banking and finance and is currently ahead of the development in this field, taking the lead from the United States – who do not want to change the current, US dollar-based global trading system.



Popular posts from this blog

Menon meets Karzai, discusses security of Indians

Kabul/New Delhi/Washington, March 5 (IANS) India Friday said that the Feb 26 terror attack in Kabul will not deter it from helping rebuild Afghanistan as National Security Adviser Shivshankar Menon met Afghan President Hamid Karzai in Kabul to review the security of around 4,000 Indians working in that country. Menon, who arrived here Friday morning on a two-day visit, discussed with Karzai some proposals to bolster security of Indians engaged in a wide array of reconstruction activities, ranging from building roads, bridges and power stations to social sector projects. The Indian government is contemplating a slew of steps to secure Indians in Afghanistan, including setting up protected venues where the Indians working on various reconstruction projects will be based. Deploying dedicated security personnel at places where Indians work is also being considered. Menon also met his Afghan counterpart Rangin Dadfar Spanta and enquired about the progress in the probe into the Kabul atta

Iran is losing the game to regional actors in its strategic depth

Rethink before It’s Too Late Iran is losing the game to regional actors in its strategic depth –Afghanistan. By Houman Dolati It is no more a surprise to see Iran absent in Afghanistan affairs. Nowadays, the Bonn Conference and Iran’s contributions to Afghanistan look more like a fading memory. Iran, which had promised of loans and credit worth five-hundred million dollars for Afghanistan, and tried to serve a key role, more than many other countries, for reconstruction and stabilization of Afghanistan, is now trying to efface that memory, saying it is a wrong path, even for the international community. Iran’s empty seat in the Rome Conference was another step backward for Afghanistan’s influential neighbor. Many other countries were surprised with Iran’s absence. Finding out the vanity of its efforts to justify absence in Rome, Iran tried to start its

Pakistani firm whose chemicals were used to kill US troops seeks subsidy for Indiana plant

By Jennifer Griffin, Justin Fishel Published March 22, 2013   A Pakistani fertilizer maker whose chemicals have been used in 80 percent of the roadside bombs that have killed and maimed American troops in Afghanistan is now seeking U.S. taxpayer subsidies in order to open a factory in Indiana.  The request appears to be on hold pending further review, but the situation has stirred outrage in Congress, where some accuse the Pakistani government of halting efforts to clamp down on the bomb-making.  For the past seven years, the U.S. government has known that the raw material calcium ammonium nitrate, or CAN, is making its way across the border into Afghanistan where the Taliban use it to fuel their most deadly weapons, namely the improvised explosive device. IEDs have long been the number one killer of U.S. and coalition troops.  The material largely comes from Pakistani fertilizer maker the Fatima Group. But the Pakistani government has stymied attempts by the Pentagon to stop the